Launching a discussion paper on the issue, the LSB said it was asking front-line regulators to ensure there is “compelling evidence” for any restrictions.

Highlighting different approaches to regulating in-house lawyers, the LSB said ILEX Professional Standards (IPS), the Council for Licensed Conveyancers (CLC) and the Institute of Chartered Accountants in England and Wales (ICAEW) had no “specific provisions” at all.

The LSB said an “initial analysis” found that these rules “appear to go broader” than the minimum restrictions required by the Legal Services Act.

“Where a regulator places restrictions on in-house practice over and above the minimum required by the Act, we expect it to be able to demonstrate this is necessary with compelling evidence in terms of risk to the regulatory objectives.

“We also expect that the absence of specific restrictions on in-house lawyers should be an active decision taken in light of an appropriate risk assessment.”

The LSB noted that the SRA stated in its business plan for 2014/15 that its approach on the issue required “re-examination and amendment to remain relevant”, and said it supported the move.

The super-regulator added that responses would be reflected in its final report on in-house lawyers in the autumn.

Richard Moriarty, chief executive of the LSB, said: “Some in-house lawyers are thinking about innovating and expanding their reach.

“The Legal Services Board is concerned that unnecessary restrictions on their ability to do so may have the potential to impose costs and red tape, frustrate choice and adversely affect access to justice.

“With over 25,000 in-house lawyers in England and Wales it is important that any restrictions on their practice be clearly justified.”

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